'Big, Beautiful Bill' Could Preempt State, Local Bans On Rent-Setting Algorithms

A new federal bill with sweeping implications could kill state and local crackdowns on algorithmic rent-setting software thanks to a last-minute provision that would ban them from regulating artificial intelligence for the next decade.

The proposed federal budget reconciliation bill dubbed “The One, Big Beautiful Bill” includes language preventing states or “political subdivisions” from enforcing “any law or regulation regulating artificial intelligence models, artificial intelligence systems, or automated decision systems during the 10-year period.”

Among the highest-profile of those systems is the one owned by Texas-based proptech firm RealPage, which has faced a flood of more than 30 class action lawsuits over alleged price fixing in the last few years as well as an ongoing antitrust case from the U.S. Department of Justice.

The AI-friendly language added to the proposed legislation came after intense lobbying from trade groups like the National Multifamily Housing Council. 

In a statement, NMHC's Real Estate Technology & Transformation Center said it supports “efforts to prevent a fragmented regulatory approach” to AI, data management and other technologies.

“As policymakers consider the role of AI in the economy, it's critical they recognize how tech-driven solutions are already delivering pro-consumer and pro-housing outcomes and avoid regulation that could stifle innovation,” RETTC Executive Director and Chief Advocacy Officer Kevin Donnelly said in an email. 

“The emerging patchwork of state and local laws and regulations often lacks a nuanced understanding of the technology or its consumer benefit and could hinder the very innovation we need to improve our nation’s long-standing housing challenges.”

RealPage officials did not respond to requests for comment on the bill, which folds in a host of other Trump administration priorities, including a hefty tax cut and additional funds for defense and immigration enforcement.

The real estate software company and the commercial real estate firms that use its platform have faced considerable legal and political scrutiny since a 2022 ProPublica investigation accused it of inflating rents through its platform.

Amid the controversy, cities like San Francisco, Philadelphia, Minneapolis and San Diego banned the use of algorithmic rent-setting software. Colorado is the only state to have outlawed the practice so far, but California, New Jersey and Washington are considering similar legislation. 

If the budget bill is approved by the Republican-controlled Congress, it could nullify bans in states that have passed them and preempt others from going forward with their own pending legislation, housing advocates said.

The Trump administration is “hanging tenants out to dry” by trying to prevent states from enacting AI regulations, according to Caroline Nagy, the senior policy counsel for housing, corporate power and climate justice at Americans for Financial Reform.

“States can, should and have every right to protect tenants from unfair, anti-competitive behavior in the marketplace, generally, but especially regarding housing,” Nagy said. “Frankly, corporate landlords are doing quite well while everyone else isn't, and to support a ban on these state laws is fundamentally anti-renter, and I would say anti-housing.”

Requests for comment from the attorneys general offices in Colorado and California were not returned before publication time. The New Jersey Office of the Attorney General had no comment due to pending litigation against RealPage.

But elected officials in cities that have passed local bans expressed worry those might not hold water either if the bill passes and bristled at the proposed action.

The prospect of the federal government barring states or localities from protecting tenants is “extremely concerning and problematic,” said Cade Underwood, director of legislation and policy for Philadelphia Council Member Nicholas O’Rourke, who sponsored Philly's ban.

“It's just another tool they're using to obscure criminal behavior and collusion between market giants,” Underwood told Bisnow. “That's the wolf in sheep's clothing that's really concerning to us. And to the degree that this legislation would prohibit us from protecting Philadelphians from illegal and collusive behavior that is just veiled behind an algorithmic black box, that's a problem.”

San Diego Council Member Sean Elo-Rivera introduced a successful ordinance earlier this week to ban algorithmic rent-setting software, making the California city the latest U.S. metro to do so. If the federal bill passes, he pledged to do everything possible to protect renters.

“Any proposal to block states and cities from protecting communities from this unethical practice is a clear example of prioritizing corporate profit over people,” Elo-Rivera said in an email. “That being said, it is also unsurprising that a brazenly corrupt President would be partnering with his GOP minions in Congress to once again sell out Americans and make life even more expensive for everyday people.” 

Proponents of the AI provision argue technology regulations from states could undercut the U.S. in its race with China for “AI supremacy.”

Earlier this year, President Donald Trump tasked Michael Kratsios, director of the White House Office of Science and Technology Policy, with securing America's position as “the unrivaled world leader in critical and emerging technologies.” At that time, Trump called for an acceleration of research and development as well as dismantling regulatory barriers to maintain the country's technological edge.

Those efforts have won heavy corporate support from firms like Microsoft and OpenAI, which have openly called on the administration to sweep away a patchwork of state laws that could imperil that future.

CRE has followed suit. According to its first-quarter lobbying report, NMHC worked to have AI-related issues added to the agenda, notably pushing for “federal policies affecting usage of data, artificial intelligence, software, and other emerging technologies used in real estate operations, development, or finance.” 

NMHC spent almost $9M on lobbying last year, nearly double what it laid out five years ago, and its affiliated political action committee donated more than $930K to Republicans last year. RealPage founder and former CEO Stephen Winn has sent over $2M to the party since the 2016 election cycle.

Meanwhile, localities staying out of decisions on AI applications isn't necessarily an unpopular idea even among legislators in places like Minneapolis, which also banned the use of rent-setting algorithms earlier this year.

Linea Palmisano was one of just two Minneapolis City Council members to oppose that ordinance, noting she felt it was a matter better regulated at the state or federal level. Palmisano also argued banning such algorithmic technology could harm small-portfolio landlords. 

“They do not have the knowledge, experience or number of properties to inform their decisions like the larger players already do,” Palmisano said. “So this technology makes sense for them.”

Still, the bipartisan National Conference of State Legislatures has urged Congress to reject the AI regulation ban in a letter on its website. The broad provision would apply to a spectrum of AI uses, from facial recognition systems to algorithmic decisions on hiring, housing and qualifying for public benefits.

“States have demonstrated leadership on critical issues in the technology space, often well in advance of federal action,” NCSL Executive Director Tim Storey wrote. “By implementing a blanket moratorium on state laws, Congress forfeits the benefits of this policy leadership and eliminates opportunities to test and refine regulatory models through localized experimentation.” 

Other legislators at the state level warn it could be unconstitutional.

A joint letter co-authored by New York State Sen. Kristen Gonzalez and state lawmakers from Colorado, Connecticut, Maryland, Minnesota, Vermont and Virginia argues the budget bill provision could be “at odds” with the 10th Amendment. That amendment gives states any powers not expressly granted to the federal government by the Constitution. 

“The proposed federal law would automatically block the application of those state laws, without offering any alternative,” the letter says. “The proposed provision would also preempt laws holding AI companies liable for any catastrophic damages that they contributed to.”

UPDATE, MAY 21, 3:21 P.M. CT: This story has been updated to clarify that the National Multifamily Housing Council lobbied legislators on the inclusion of the language related to artificial intelligence.